WASHINGTON,
Jan. 19 - Dairy Farmers of America (DFA) and its allied
cooperatives in Dairy Marketing Services (DFS) say that the proposed
settlement of antitrust claims against Dean Foods discriminates
against their members and would mean lower milk prices for all
farmers in the Northeast. DFA and DMS, supported by two dozen
farmers, filed papers Tuesday asking the U.S. District Court in
Burlington, Vt., to reject the $30 million deal worked out between
lawyers for Dean Foods and its challengers.

The brief says terms of the settlement
filed December 23 inappropriately favor some farmers over others by
literally requiring Dean to stop buying milk from one group of
producers in order to buy from another group, setting up an
“intractable” conflict among farmers in the region. It would
force farmers who market through DMS - which markets for DFA,
Dairylea Cooperative of New York and St. Alban's Cooperative
Creamery in Vermont - to give up 60 million pounds a month of milk
sales so that Dean instead could buy that much from non-member farms.

DFA and DMS say they understand Dean's
business reasons for wanting to settle but claim that lawyers for the
five dairy farmers who sued Dean, DFA, DMS and H.P. Hood (which
subsequently was dismissed as a defendant) unfairly favored one
group. The decision to settle with Dean, “while continuing to seek
their remaining alleged damages from farmer-owned sources, is not a
decision that could have been countenanced by class representatives
loyal to those dairy farmers in the class who are exposed to paying
that liability,” the brief said. “[A]ttorneys for the entire
class of dairy farmer plaintiffs have favored one segment of the
class while it penalizes another segment,” said Brad Keating, COO
for DFA's Northeast Area.

The original suit and the terms of the
settlement challenge the basis of farmer co-ops. “[T]he farmers and
co-ops who market through DMS generally do so because they believe it
benefits farmers to work together to obtain higher premiums,” the
brief said. The goal of the settlement, by “limiting DMS and
reducing its marketing opportunities is fundamentally irreconcilable
with those farmers' beliefs about how best to manage their
businesses,” it contended.

“This provision seems to undercut the
very reasons why we at St. Albans decided to join DMS in the first
place - to work together with other co-ops to make sure that we
were able to serve an increasingly consolidating marketplace, and to
do so in a way that will protect prices and premiums for dairy
farmers,” said Ralph McNall, president of St. Albans. The lawyers
who represented the original challengers could not have thought that
it was a good deal for his co-op's farmers. “I do not believe a
lawyer who represented just those farmers who are associated with DMS
could have agreed to a settlement,” he said in a deposition filed
with the brief.

If the settlement is approved, dairy
farmers would get a lower pay price for their milk because it would
allow Dean to set the market price for up to 60 million pounds of
milk per month from non-member farms for 30 months, the cooperatives
argued. That provision “is likely to create a downward ripple
effect on current pricing for milk purchases from DFA, DMS and other
milk suppliers in the Northeast,” resulting in “price erosion for
all dairy farmers,” they said.

The co-ops also challenged distribution
of the proposed $30 million in damages (less $10 million in attorney
fees) to dairy farmers who sold milk in the region from 2002 through
2010. “We believe the per-farmer award has been highly exaggerated,
but more importantly, we believe the benefit of a small one-time cash
payment is far overshadowed by the long-term negative impact on
farmers' wallets,” said DMS General Manager Greg Wickham. With
some 13,000 dairy farmers in the market area, the average farmer
stands to receive approximately $1,500.

The Safe and Accurate Food Labeling Act has been introduced by GOP Congressman Mike Pompeo. On this week's edition of Open Mic, the Kansas 4th District Representative discusses a national voluntary labeling program that balances the consumer's right to know what's in the food they eat with the industry's need to embrace technology to satisfy the world's growing demand for food. He also talks about the EPA's proposed rule on waters of the U.S.